Lente, a manufacturer of energy-efficient lighting solutions, has had such success with its new products that it is planning to substantially expand its manufacturing capacity with a P15 million investment in new machinery. Lente plans to maintain its current 30% debt-to-total-assets ratio for its capital structure and to maintain its dividend policy in which at the end of each year it distributes 55% of the year’s net income. This year’s net income was P8 million. How much external equity must Lente seek now to expand as planned?
Lente, a manufacturer of energy-efficient lighting solutions, has had such success with its new products that it is planning to substantially expand its manufacturing capacity with a P15 million investment in new machinery. Lente plans to maintain its current 30% debt-to-total-assets ratio for its capital structure and to maintain its dividend policy in which at the end of each year it distributes 55% of the year’s net income. This year’s net income was P8 million. How much external equity must Lente seek now to expand as planned?
Chapter3: Evaluation Of Financial Performance
Section: Chapter Questions
Problem 17P
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Lente, a manufacturer of energy-efficient lighting solutions, has had such success with its new products that it is planning to substantially expand its manufacturing capacity with a P15 million investment in new machinery. Lente plans to maintain its current 30% debt-to-total-assets ratio for its capital structure and to maintain its dividend policy in which at the end of each year it distributes 55% of the year’s net income. This year’s net income was P8 million. How much external equity must Lente seek now to expand as planned?
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